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The Australian share market finished session deep in the red on Thursday, 28 January 2021, sagging as much as A$55 billion in the worst day of trading for the sharemarket since the end of September, as risk aversion selloff triggered across the board on tracking negative lead from Wall Street overnight after the Federal Reserve flagged a potential slowdown in the economic recovery.
At closing bell, the benchmark S&P/ASX200 declined 130.87 points, or 1.93%, to 6,649.69. The broader All Ordinaries dropped 142.57 points, or 2.02%, to 6,917.59.
Most sectors and 90% of stocks on the ASX 200 lost ground today. Technology stocks were today s biggest underperformers. Afterpay (APT), Wisetech (WTC) and Xero (XRO) fell by 6%.
Australia’s Inflation Exceeds Estimates as Recovery Builds
Bloomberg 1/27/2021 Michael Heath
(Bloomberg) Australia’s consumer prices rose faster than forecast in the final three months of last year as the government amended funding to various stimulus programs amid an economy regaining momentum.
The consumer price index advanced 0.9% from the third quarter, underpinned by increases in tobacco excise, compared with economists’ estimates of a 0.7% gain, data from the Australian Bureau of Statistics showed Wednesday. Annual CPI also beat forecasts, similarly rising by 0.9% versus an estimated 0.7%.
“Since the June quarter fall of 0.3%, the increase in annual inflation largely reflects the unwinding of free child care and higher petrol prices,” said Michelle Marquardt, head of Prices Statistics at the ABS. “The rise in demand for new dwellings is reflected in higher building approvals for houses and a record value for housing loan commitments.”
Australian Economy Showing a Marked Rebound, Inflation Not Likely to Worry RBA Just Yet
The Australian economy is showing a marked rebound from its first recession in decades, but the improvement is unlikely to alter the outlook for interest rates while inflation remains extremely subdued.
The latest consumer price index is expected to show benign price pressures overall, with government stimulus measures keeping the lid on some categories.
Economists’ forecasts centre on a 0.7 percent quarterly rise in the CPI, which will also keep the annual inflation rate at 0.7 percent, well below the Reserve Bank’s two to three percent target band.